Gold declined for a second day in London as Greece progressed in staving off a default, curbing demand for the metal as a protection of wealth. Euro-area finance ministers are set to approve the next aid payment due to Greece and outline a second rescue after banks lined up behind debt-rollover plans and Greek lawmakers approved a budget-cutting package on a second ballot. Gold has dropped 5.4 percent since reaching a record at the beginning of May. “There could be scope for further pressure in the short term” for gold, James Moore, an analyst at TheBullionDesk.com in London, said today in a report. The agreement of austerity measures in Greece is “likely to trigger an increase in risk appetite. In addition, gold is entering what is traditionally a slow period for physical demand.” Immediate-delivery gold fell $7.69, or 0.5 percent, to $1,492.66 an ounce by 8:56 a.m. in London. Prices are down 0.7 percent this week after climbing for an 11th straight quarter. Gold for August delivery was 0.7 percent lower at $1,492.60 an ounce on the Comex in New York. Gold is up 5 percent in 2011 after climbing the past 10 years, the longest run of gains in at least nine decades. Europe’s debt crisis helped bullion reach a record $1,577.57 on May 2. Greek Prime Minister George Papandreou won a vote to implement a 78 billion-euro ($113 billion) package of tax increases and asset sales, a condition of receiving further aid. The dollar fell to a three-week low versus the euro as traders increased bets the European Central Bank will tighten monetary policy. Gold typically moves counter to the greenback. ‘Strong’ Vigilance ECB President Jean-Claude Trichet reiterated yesterday that policy makers are in a state of “strong vigilance” against inflation, highlighting chances of a rate increase at their meeting on July 7. The central bank raised its key rate in April for the first time in almost three years, lifting it by a quarter point to 1.25 percent. “Gold’s inability to extend further gains in recent sessions, despite a weaker U.S. dollar, could be a warning sign, heading into the third quarter,” commodity analysts at Australia & New Zealand Banking Group Ltd. (ANZ), led by Mark Pervan, said in a report today. U.S. Mint American Eagle gold coin sales fell 43 percent to 61,500 ounces in June, the lowest amount since December, data on the mint’s website show. American Eagle silver coin sales slipped 6.9 percent to 3.4 million ounces last month. Silver for immediate delivery fell 1.4 percent to $34.215 an ounce in London. Holdings of the metal in exchange-traded products declined 19.7 metric tons to 13,526 tons yesterday, according to data compiled by Bloomberg. Palladium slipped 0.5 percent to $753.38 an ounce. Platinum was down 0.8 percent at $1,707 an ounce. To contact the reporter for this story: Nicholas Larkin in London at nlarkin1@bloomberg.net; Phoebe Sedgman in Wellington at psedgman2@bloomberg.net To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net

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